Chapter 8 - The Machine Breakers

It was just before Ernest ran for Congress, on the socialist
ticket, that father gave what he privately called his "Profit and
Loss" dinner. Ernest called it the dinner of the Machine Breakers.
In point of fact, it was merely a dinner for business men--small
business men, of course. I doubt if one of them was interested in
any business the total capitalization of which exceeded a couple of
hundred thousand dollars. They were truly representative middle-
class business men.

There was Owen, of Silverberg, Owen & Company--a large grocery firm
with several branch stores. We bought our groceries from them.
There were both partners of the big drug firm of Kowalt & Washburn,
and Mr. Asmunsen, the owner of a large granite quarry in Contra
Costa County. And there were many similar men, owners or part-
owners in small factories, small businesses and small industries--
small capitalists, in short.

They were shrewd-faced, interesting men, and they talked with
simplicity and clearness. Their unanimous complaint was against
the corporations and trusts. Their creed was, "Bust the Trusts."
All oppression originated in the trusts, and one and all told the
same tale of woe. They advocated government ownership of such
trusts as the railroads and telegraphs, and excessive income taxes,
graduated with ferocity, to destroy large accumulations. Likewise
they advocated, as a cure for local ills, municipal ownership of
such public utilities as water, gas, telephones, and street
railways.

Especially interesting was Mr. Asmunsen's narrative of his
tribulations as a quarry owner. He confessed that he never made
any profits out of his quarry, and this, in spite of the enormous
volume of business that had been caused by the destruction of San
Francisco by the big earthquake. For six years the rebuilding of
San Francisco had been going on, and his business had quadrupled
and octupled, and yet he was no better off.

"The railroad knows my business just a little bit better than I
do," he said. "It knows my operating expenses to a cent, and it
knows the terms of my contracts. How it knows these things I can
only guess. It must have spies in my employ, and it must have
access to the parties to all my contracts. For look you, when I
place a big contract, the terms of which favor me a goodly profit,
the freight rate from my quarry to market is promptly raised. No
explanation is made. The railroad gets my profit. Under such
circumstances I have never succeeded in getting the railroad to
reconsider its raise. On the other hand, when there have been
accidents, increased expenses of operating, or contracts with less
profitable terms, I have always succeeded in getting the railroad
to lower its rate. What is the result? Large or small, the
railroad always gets my profits."

"What remains to you over and above," Ernest interrupted to ask,
"would roughly be the equivalent of your salary as a manager did
the railroad own the quarry."

"The very thing," Mr. Asmunsen replied. "Only a short time ago I
had my books gone through for the past ten years. I discovered
that for those ten years my gain was just equivalent to a manager's
salary. The railroad might just as well have owned my quarry and
hired me to run it."

"But with this difference," Ernest laughed; "the railroad would
have had to assume all the risk which you so obligingly assumed for
it."

"Very true," Mr. Asmunsen answered sadly.

Having let them have they say, Ernest began asking questions right
and left. He began with Mr. Owen.

"You started a branch store here in Berkeley about six months ago?"

"Yes," Mr. Owen answered.

"And since then I've noticed that three little corner groceries
have gone out of business. Was your branch store the cause of it?"

Mr. Owen affirmed with a complacent smile. "They had no chance
against us."

"Why not?"

"We had greater capital. With a large business there is always
less waste and greater efficiency."

"And your branch store absorbed the profits of the three small
ones. I see. But tell me, what became of the owners of the three
stores?"

"One is driving a delivery wagon for us. I don't know what
happened to the other two."

Ernest turned abruptly on Mr. Kowalt.

"You sell a great deal at cut-rates.* What have become of the
owners of the small drug stores that you forced to the wall?"

* A lowering of selling price to cost, and even to less than cost.
Thus, a large company could sell at a loss for a longer period than
a small company, and so drive the small company out of business. A
common device of competition.

"One of them, Mr. Haasfurther, has charge now of our prescription
department," was the answer.

"And you absorbed the profits they had been making?"

"Surely. That is what we are in business for."

"And you?" Ernest said suddenly to Mr. Asmunsen. "You are
disgusted because the railroad has absorbed your profits?"

Mr. Asmunsen nodded.

"What you want is to make profits yourself?"

Again Mr. Asmunsen nodded.

"Out of others?"

There was no answer.

"Out of others?" Ernest insisted.

"That is the way profits are made," Mr. Asmunsen replied curtly.

"Then the business game is to make profits out of others, and to
prevent others from making profits out of you. That's it, isn't
it?"

Ernest had to repeat his question before Mr. Asmunsen gave an
answer, and then he said:

"Yes, that's it, except that we do not object to the others making
profits so long as they are not extortionate."

"By extortionate you mean large; yet you do not object to making
large profits yourself? . . . Surely not?"

And Mr. Asmunsen amiably confessed to the weakness. There was one
other man who was quizzed by Ernest at this juncture, a Mr. Calvin,
who had once been a great dairy-owner.

"Some time ago you were fighting the Milk Trust," Ernest said to
him; "and now you are in Grange politics.* How did it happen?"

* Many efforts were made during this period to organize the
perishing farmer class into a political party, the aim of which was
destroy the trusts and corporations by drastic legislation. All
such attempts ended in failure.

"Oh, I haven't quit the fight," Mr. Calvin answered, and he looked
belligerent enough. "I'm fighting the Trust on the only field
where it is possible to fight--the political field. Let me show
you. A few years ago we dairymen had everything our own way."

"But you competed among yourselves?" Ernest interrupted.

"Yes, that was what kept the profits down. We did try to organize,
but independent dairymen always broke through us. Then came the
Milk Trust."

"Financed by surplus capital from Standard Oil,* Ernest said.

* The first successful great trust--almost a generation in advance
of the rest.

"Yes," Mr. Calvin acknowledged. "But we did not know it at the
time. Its agents approached us with a club. "Come in and be fat,"
was their proposition, "or stay out and starve." Most of us came
in. Those that didn't, starved. Oh, it paid us . . . at first.
Milk was raised a cent a quart. One-quarter of this cent came to
us. Three-quarters of it went to the Trust. Then milk was raised
another cent, only we didn't get any of that cent. Our complaints
were useless. The Trust was in control. We discovered that we
were pawns. Finally, the additional quarter of a cent was denied
us. Then the Trust began to squeeze us out. What could we do? We
were squeezed out. There were no dairymen, only a Milk Trust."

"But with milk two cents higher, I should think you could have
competed," Ernest suggested slyly.

"So we thought. We tried it." Mr. Calvin paused a moment. "It
broke us. The Trust could put milk upon the market more cheaply
than we. It could sell still at a slight profit when we were
selling at actual loss. I dropped fifty thousand dollars in that
venture. Most of us went bankrupt.* The dairymen were wiped out
of existence."

* Bankruptcy--a peculiar institution that enabled an individual,
who had failed in competitive industry, to forego paying his debts.
The effect was to ameliorate the too savage conditions of the fang-
and-claw social struggle.

"So the Trust took your profits away from you," Ernest said, "and
you’ve gone into politics in order to legislate the Trust out of
existence and get the profits back?"

Mr. Calvin’s face lighted up. "That is precisely what I say in my
speeches to the farmers. That's our whole idea in a nutshell."

"And yet the Trust produces milk more cheaply than could the
independent dairymen?" Ernest queried.

"Why shouldn't it, with the splendid organization and new machinery
its large capital makes possible?"

Mr. Calvin here launched out into a political speech in exposition
of his views. He was warmly followed by a number of the others,
and the cry of all was to destroy the trusts.

"Poor simple folk," Ernest said to me in an undertone. "They see
clearly as far as they see, but they see only to the ends of their
noses."

A little later he got the floor again, and in his characteristic
way controlled it for the rest of the evening.

"I have listened carefully to all of you," he began, "and I see
plainly that you play the business game in the orthodox fashion.
Life sums itself up to you in profits. You have a firm and abiding
belief that you were created for the sole purpose of making
profits. Only there is a hitch. In the midst of your own profit-
making along comes the trust and takes your profits away from you.
This is a dilemma that interferes somehow with the aim of creation,
and the only way out, as it seems to you, is to destroy that which
takes from you your profits.

"I have listened carefully, and there is only one name that will
epitomize you. I shall call you that name. You are machine-
breakers. Do you know what a machine-breaker is? Let me tell you.
In the eighteenth century, in England, men and women wove cloth on
hand-looms in their own cottages. It was a slow, clumsy, and
costly way of weaving cloth, this cottage system of manufacture.
Along came the steam-engine and labor-saving machinery. A thousand
looms assembled in a large factory, and driven by a central engine
wove cloth vastly more cheaply than could the cottage weavers on
their hand-looms. Here in the factory was combination, and before
it competition faded away. The men and women who had worked the
hand-looms for themselves now went into the factories and worked
the machine-looms, not for themselves, but for the capitalist
owners. Furthermore, little children went to work on the machine-
looms, at lower wages, and displaced the men. This made hard times
for the men. Their standard of living fell. They starved. And
they said it was all the fault of the machines. Therefore, they
proceeded to break the machines. They did not succeed, and they
were very stupid.

"Yet you have not learned their lesson. Here are you, a century
and a half later, trying to break machines. By your own confession
the trust machines do the work more efficiently and more cheaply
than you can. That is why you cannot compete with them. And yet
you would break those machines. You are even more stupid than the
stupid workmen of England. And while you maunder about restoring
competition, the trusts go on destroying you.

"One and all you tell the same story,--the passing away of
competition and the coming on of combination. You, Mr. Owen,
destroyed competition here in Berkeley when your branch store drove
the three small groceries out of business. Your combination was
more effective. Yet you feel the pressure of other combinations on
you, the trust combinations, and you cry out. It is because you
are not a trust. If you were a grocery trust for the whole United
States, you would be singing another song. And the song would be,
"Blessed are the trusts." And yet again, not only is your small
combination not a trust, but you are aware yourself of its lack of
strength. You are beginning to divine your own end. You feel
yourself and your branch stores a pawn in the game. You see the
powerful interests rising and growing more powerful day by day; you
feel their mailed hands descending upon your profits and taking a
pinch here and a pinch there--the railroad trust, the oil trust,
the steel trust, the coal trust; and you know that in the end they
will destroy you, take away from you the last per cent of your
little profits.

"You, sir, are a poor gamester. When you squeezed out the three
small groceries here in Berkeley by virtue of your superior
combination, you swelled out your chest, talked about efficiency
and enterprise, and sent your wife to Europe on the profits you had
gained by eating up the three small groceries. It is dog eat dog,
and you ate them up. But, on the other hand, you are being eaten
up in turn by the bigger dogs, wherefore you squeal. And what I
say to you is true of all of you at this table. You are all
squealing. You are all playing the losing game, and you are all
squealing about it.

"But when you squeal you don't state the situation flatly, as I
have stated it. You don't say that you like to squeeze profits out
of others, and that you are making all the row because others are
squeezing your profits out of you. No, you are too cunning for
that. You say something else. You make small-capitalist political
speeches such as Mr. Calvin made. What did he say? Here are a few
of his phrases I caught: "Our original principles are all right,"
"What this country requires is a return to fundamental American
methods--free opportunity for all," "The spirit of liberty in which
this nation was born," "Let us return to the principles of our
forefathers."

"When he says "free opportunity for all," he means free opportunity
to squeeze profits, which freedom of opportunity is now denied him
by the great trusts. And the absurd thing about it is that you
have repeated these phrases so often that you believe them. You
want opportunity to plunder your fellow-men in your own small way,
but you hypnotize yourselves into thinking you want freedom. You
are piggish and acquisitive, but the magic of your phrases leads
you to believe that you are patriotic. Your desire for profits,
which is sheer selfishness, you metamorphose into altruistic
solicitude for suffering humanity. Come on now, right here amongst
ourselves, and be honest for once. Look the matter in the face and
state it in direct terms."

There were flushed and angry faces at the table, and withal a
measure of awe. They were a little frightened at this smooth-faced
young fellow, and the swing and smash of his words, and his
dreadful trait of calling a spade a spade. Mr. Calvin promptly
replied.

"And why not?" he demanded. "Why can we not return to ways of our
fathers when this republic was founded? You have spoken much
truth, Mr. Everhard, unpalatable though it has been. But here
amongst ourselves let us speak out. Let us throw off all disguise
and accept the truth as Mr. Everhard has flatly stated it. It is
true that we smaller capitalists are after profits, and that the
trusts are taking our profits away from us. It is true that we
want to destroy the trusts in order that our profits may remain to
us. And why can we not do it? Why not? I say, why not?"

"Ah, now we come to the gist of the matter," Ernest said with a
pleased expression. "I'll try to tell you why not, though the
telling will be rather hard. You see, you fellows have studied
business, in a small way, but you have not studied social evolution
at all. You are in the midst of a transition stage now in economic
evolution, but you do not understand it, and that's what causes all
the confusion. Why cannot you return? Because you can't. You can
no more make water run up hill than can you cause the tide of
economic evolution to flow back in its channel along the way it
came. Joshua made the sun stand still upon Gibeon, but you would
outdo Joshua. You would make the sun go backward in the sky. You
would have time retrace its steps from noon to morning.

"In the face of labor-saving machinery, of organized production, of
the increased efficiency of combination, you would set the economic
sun back a whole generation or so to the time when there were no
great capitalists, no great machinery, no railroads--a time when a
host of little capitalists warred with each other in economic
anarchy, and when production was primitive, wasteful, unorganized,
and costly. Believe me, Joshua's task was easier, and he had
Jehovah to help him. But God has forsaken you small capitalists.
The sun of the small capitalists is setting. It will never rise
again. Nor is it in your power even to make it stand still. You
are perishing, and you are doomed to perish utterly from the face
of society.

"This is the fiat of evolution. It is the word of God.
Combination is stronger than competition. Primitive man was a puny
creature hiding in the crevices of the rocks. He combined and made
war upon his carnivorous enemies. They were competitive beasts.
Primitive man was a combinative beast, and because of it he rose to
primacy over all the animals. And man has been achieving greater
and greater combinations ever since. It is combination versus
competition, a thousand centuries long struggle, in which
competition has always been worsted. Whoso enlists on the side of
competition perishes."

Very true," Ernest answered. "And the trusts themselves destroyed
competition. That, by your own word, is why you are no longer in
the dairy business."

The first laughter of the evening went around the table, and even
Mr. Calvin joined in the laugh against himself.

"And now, while we are on the trusts," Ernest went on, "let us
settle a few things. I shall make certain statements, and if you
disagree with them, speak up. Silence will mean agreement. Is it
not true that a machine-loom will weave more cloth and weave more
cheaply than a hand-loom?" He paused, but nobody spoke up. "Is it
not then highly irrational to break the machine-loom and go back to
the clumsy and more costly hand-loom method of weaving?" Heads
nodded in acquiescence. "Is it not true that that known as a trust
produces more efficiently and cheaply than can a thousand competing
small concerns?" Still no one objected. "Then is it not
irrational to destroy that cheap and efficient combination?"

No one answered for a long time. Then Mr. Kowalt spoke.

"What are we to do, then?" he demanded. "To destroy the trusts is
the only way we can see to escape their domination."

Ernest was all fire and aliveness on the instant.

"I'll show you another way!" he cried. "Let us not destroy those
wonderful machines that produce efficiently and cheaply. Let us
control them. Let us profit by their efficiency and cheapness.
Let us run them for ourselves. Let us oust the present owners of
the wonderful machines, and let us own the wonderful machines
ourselves. That, gentlemen, is socialism, a greater combination
than the trusts, a greater economic and social combination than any
that has as yet appeared on the planet. It is in line with
evolution. We meet combination with greater combination. It is
the winning side. Come on over with us socialists and play on the
winning side."

Here arose dissent. There was a shaking of heads, and mutterings
arose.

"All right, then, you prefer to be anachronisms," Ernest laughed.
"You prefer to play atavistic roles. You are doomed to perish as
all atavisms perish. Have you ever asked what will happen to you
when greater combinations than even the present trusts arise? Have
you ever considered where you will stand when the great trusts
themselves combine into the combination of combinations--into the
social, economic, and political trust?"

He turned abruptly and irrelevantly upon Mr. Calvin.

"Tell me," Ernest said, "if this is not true. You are compelled to
form a new political party because the old parties are in the hands
of the trusts. The chief obstacle to your Grange propaganda is the
trusts. Behind every obstacle you encounter, every blow that
smites you, every defeat that you receive, is the hand of the
trusts. Is this not so? Tell me."

Mr. Calvin sat in uncomfortable silence.

"Go ahead," Ernest encouraged.

"It is true," Mr. Calvin confessed. "We captured the state
legislature of Oregon and put through splendid protective
legislation, and it was vetoed by the governor, who was a creature
of the trusts. We elected a governor of Colorado, and the
legislature refused to permit him to take office. Twice we have
passed a national income tax, and each time the supreme court
smashed it as unconstitutional. The courts are in the hands of the
trusts. We, the people, do not pay our judges sufficiently. But
there will come a time--"

"When the combination of the trusts will control all legislation,
when the combination of the trusts will itself be the government,"
Ernest interrupted.

"Never! never!" were the cries that arose. Everybody was excited
and belligerent.

"Tell me," Ernest demanded, "what will you do when such a time
comes?"

"We will rise in our strength!" Mr. Asmunsen cried, and many voices
backed his decision.

"That will be civil war," Ernest warned them.

"So be it, civil war," was Mr. Asmunsen's answer, with the cries of
all the men at the table behind him. "We have not forgotten the
deeds of our forefathers. For our liberties we are ready to fight
and die."

Ernest smiled.

"Do not forget," he said, "that we had tacitly agreed that liberty
in your case, gentlemen, means liberty to squeeze profits out of
others."

The table was angry, now, fighting angry; but Ernest controlled the
tumult and made himself heard.

"One more question. When you rise in your strength, remember, the
reason for your rising will be that the government is in the hands
of the trusts. Therefore, against your strength the government
will turn the regular army, the navy, the militia, the police--in
short, the whole organized war machinery of the United States.
Where will your strength be then?"

Dismay sat on their faces, and before they could recover, Ernest
struck again.

"Do you remember, not so long ago, when our regular army was only
fifty thousand? Year by year it has been increased until to-day it
is three hundred thousand."

Again he struck.

"Nor is that all. While you diligently pursued that favorite
phantom of yours, called profits, and moralized about that favorite
fetich of yours, called competition, even greater and more direful
things have been accomplished by combination. There is the
militia."

"It is our strength!" cried Mr. Kowalt. "With it we would repel
the invasion of the regular army."

"You would go into the militia yourself," was Ernest's retort, "and
be sent to Maine, or Florida, or the Philippines, or anywhere else,
to drown in blood your own comrades civil-warring for their
liberties. While from Kansas, or Wisconsin, or any other state,
your own comrades would go into the militia and come here to
California to drown in blood your own civil-warring."

Now they were really shocked, and they sat wordless, until Mr. Owen
murmured:

"We would not go into the militia. That would settle it. We would
not be so foolish."

Ernest laughed outright.

"You do not understand the combination that has been effected. You
could not help yourself. You would be drafted into the militia."

"There is such a thing as civil law," Mr. Owen insisted.

"Not when the government suspends civil law. In that day when you
speak of rising in your strength, your strength would be turned
against yourself. Into the militia you would go, willy-nilly.
Habeas corpus, I heard some one mutter just now. Instead of habeas
corpus you would get post mortems. If you refused to go into the
militia, or to obey after you were in, you would be tried by
drumhead court martial and shot down like dogs. It is the law."

"It is not the law!" Mr. Calvin asserted positively. "There is no
such law. Young man, you have dreamed all this. Why, you spoke of
sending the militia to the Philippines. That is unconstitutional.
The Constitution especially states that the militia cannot be sent
out of the country."

"What's the Constitution got to do with it?" Ernest demanded. "The
courts interpret the Constitution, and the courts, as Mr. Asmunsen
agreed, are the creatures of the trusts. Besides, it is as I have
said, the law. It has been the law for years, for nine years,
gentlemen."

"That we can be drafted into the militia?" Mr. Calvin asked
incredulously. "That they can shoot us by drumhead court martial
if we refuse?"

"Yes," Ernest answered, "precisely that."

"How is it that we have never heard of this law?" my father asked,
and I could see that it was likewise new to him.

"For two reasons," Ernest said. "First, there has been no need to
enforce it. If there had, you'd have heard of it soon enough. And
secondly, the law was rushed through Congress and the Senate
secretly, with practically no discussion. Of course, the
newspapers made no mention of it. But we socialists knew about it.
We published it in our papers. But you never read our papers."

"I still insist you are dreaming," Mr. Calvin said stubbornly.
"The country would never have permitted it."

"But the country did permit it," Ernest replied. "And as for my
dreaming--" he put his hand in his pocket and drew out a small
pamphlet--"tell me if this looks like dream-stuff."

He opened it and began to read:

"'Section One, be it enacted, and so forth and so forth, that the
militia shall consist of every able-bodied male citizen of the
respective states, territories, and District of Columbia, who is
more than eighteen and less than forty-five years of age.'

"'Section Seven, that any officer or enlisted man'--remember
Section One, gentlemen, you are all enlisted men--"that any
enlisted man of the militia who shall refuse or neglect to present
himself to such mustering officer upon being called forth as herein
prescribed, shall be subject to trial by court martial, and shall
be punished as such court martial shall direct.'

"'Section Eight, that courts martial, for the trial of officers or
men of the militia, shall be composed of militia officers only.'

"'Section Nine, that the militia, when called into the actual
service of the United States, shall be subject to the same rules
and articles of war as the regular troops of the United States.'

"There you are gentlemen, American citizens, and fellow-militiamen.
Nine years ago we socialists thought that law was aimed against
labor. But it would seem that it was aimed against you, too.
Congressman Wiley, in the brief discussion that was permitted, said
that the bill 'provided for a reserve force to take the mob by the
throat'--you're the mob, gentlemen--'and protect at all hazards
life, liberty, and property.' And in the time to come, when you
rise in your strength, remember that you will be rising against the
property of the trusts, and the liberty of the trusts, according to
the law, to squeeze you. Your teeth are pulled, gentlemen. Your
claws are trimmed. In the day you rise in your strength, toothless
and clawless, you will be as harmless as any army of clams."

"I don't believe it!" Kowalt cried. "There is no such law. It is
a canard got up by you socialists."

"This bill was introduced in the House of Representatives on July
30, 1902," was the reply. "It was introduced by Representative
Dick of Ohio. It was rushed through. It was passed unanimously by
the Senate on January 14, 1903. And just seven days afterward was
approved by the President of the United States."*

* Everhard was right in the essential particulars, though his date
of the introduction of the bill is in error. The bill was
introduced on June 30, and not on July 30. The Congressional
Record is here in Ardis, and a reference to it shows mention of the
bill on the following dates: June 30, December 9, 15, 16, and 17,
1902, and January 7 and 14, 1903. The ignorance evidenced by the
business men at the dinner was nothing unusual. Very few people
knew of the existence of this law. E. Untermann, a revolutionist,
in July, 1903, published a pamphlet at Girard, Kansas, on the
"Militia Bill." This pamphlet had a small circulation among
workingmen; but already had the segregation of classes proceeded so
far, that the members of the middle class never heard of the
pamphlet at all, and so remained in ignorance of the law.